๐๐ฎ๐๐ต๐ณ๐น๐ผ๐
There are only two ways to improve cashflow:
Increase Income
Decrease expenditure.
So ok, that is a little simplistic, but the principle is sound, and worthy of keeping in mind when you are trying to improve the cash you have in your business. Letโs look at these two separately.
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๐๐ป๐ฐ๐ฟ๐ฒ๐ฎ๐๐ฒ ๐๐ป๐ฐ๐ผ๐บ๐ฒ.
The best way to increase income, is to increase sales. This has the highest potential to improve your business as once you know how to sell, you can continue to do so. However, and this is critical, sales without receipts are just a delusion. If you cannot get the money in your bank account rather than your customerโs, you are not only throwing money away but also wasting time and energy that could be better spent elsewhere.
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Another way to improve your income is to borrow money โ this is a short-term fix, as you will need to repay the loan, but as a stop gap or part of a carefully planned growth strategy debt financing has a great part to play. Donโt borrow money you canโt afford to repay, and donโt borrow money to prop up a part of your business that doesn’t work or canโt work in its current state.
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Convert assets you already have into cash. If you have old stock, or unused assets consider selling them. Even if you do not recoup the price of the goods or assets, you will be better off with the cash in the bank than the product going mouldy on the shelf.
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What about unused space โ is your workplace now too big, especially if you now have a flexible working environment. If so, could you sub-let it or downsize to a smaller office?
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๐๐ฒ๐ฐ๐ฟ๐ฒ๐ฎ๐๐ฒ ๐ฒ๐
๐ฝ๐ฒ๐ป๐ฑ๐ถ๐๐๐ฟ๐ฒ
Review all expenditure lines in your budget or cashflow, what are you spending on that can be reduced? Can you get better terms with your suppliers? If you have a team, you could ask different team members to review different expenditure lines, or to form groups to review specific large items. Get your team to ask awkward questions of each other to get a different perspective. Only do this if you have a trusting and co-operate working environment โ you donโt want to start a war within the team.
There is a limit to cost cutting โ if you are pared down to the bone, you may not be investing in the things that will grow your business or be able to take advantage of opportunities that come your way.
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๐ง๐ถ๐บ๐ถ๐ป๐ด
Having a Cashflow Forecast means that you will know when everything is due. You will be able to plan how to cover a deficient either by short term borrowing or by collecting debts quicker or delaying payments to suppliers. Knowing the state of your finances will enable you to take advantage of any opportunities that come your way, or indeed plan for them to happen.
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If you are having trouble with your cashflow, get in touch with me and I can help you to plan for your future growth.
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#cashflow #businessgrowth #actioncoachoakham
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